Correlation Between Federated Total and Credit Suisse

Can any of the company-specific risk be diversified away by investing in both Federated Total and Credit Suisse at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Federated Total and Credit Suisse into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Federated Total Return and Credit Suisse Modity, you can compare the effects of market volatilities on Federated Total and Credit Suisse and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Federated Total with a short position of Credit Suisse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Total and Credit Suisse.

Diversification Opportunities for Federated Total and Credit Suisse

0.63

Correlation Coefficient

Federated Total  Credit Suisse

Poor diversification

The 3 months correlation between Federated and Credit is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Federated Total Return and Credit Suisse Modity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Suisse Modity and Federated Total is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Federated Total Return are associated (or correlated) with Credit Suisse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Suisse Modity has no effect on the direction of Federated Total i.e., Federated Total and Credit Suisse go up and down completely randomly.

Pair Corralation between Federated Total and Credit Suisse

Assuming the 90 days horizon Federated Total is expected to generate 3.56 times less return on investment than Credit Suisse. But when comparing it to its historical volatility, Federated Total Return is 2.33 times less risky than Credit Suisse. It trades about 0.12 of its potential returns per unit of risk. Credit Suisse Modity is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2,166  in Credit Suisse Modity on December 30, 2024 and sell it today you would earn a total of  170.00  from holding Credit Suisse Modity or generate 7.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Federated Total Return  vs.  Credit Suisse Modity

Federated Total Return

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Total Return are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Federated Total is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Credit Suisse Modity

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Credit Suisse Modity are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Credit Suisse may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Federated Total and Credit Suisse

The main advantage of trading using opposite Federated Total and Credit Suisse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Total position performs unexpectedly, Credit Suisse can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Credit Suisse will offset losses from the drop in Credit Suisse's long position.

The idea behind Federated Total Return and Credit Suisse Modity pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.